Thursday, July 30, 2026
Page 3
Court of Appeal:
‘Yelp Law’ Requires Threat to Act on Clause Barring Critiques
Opinion Says Statute That Invalidates Provisions That Purport to Waive Customer’s Right to Criticize Seller Does Not Create Private Cause of Action Absent Claims of Intent to Enforce
By Kimber Cooley, associate editor
Div. One of this district’s Court of Appeal held yesterday that the so-called “Yelp Law,” which protects the right of consumers to post negative reviews of businesses, does not create a private right of action for civil penalties absent allegations that the company threatened enforcement of a non-disparagement clause.
At issue is Civil Code §1670.8, which provides:
“(a)(1) A contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.
“(2) It shall be unlawful to threaten or to seek to enforce a provision made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section.”
Subdivision (c) provides for a private right of action such that “[a]ny person who violates this section shall be subject to a civil penalty not to exceed [$2,500] for the first violation, and [$5,000] for…each subsequent violation, to be assessed and collected in a civil action brought by the consumer.”
First Impression
Justice Gregory J. Weingart authored yesterday’s opinion, joined in by Acting Presiding Justice Helen I. Bendix and Justice Michelle C. Kim, remarking that “[t]he question in this case, a matter of first impression, is what it means to ‘violate[] this section.’ ” He declared:
“This case presents a narrow question of statutory interpretation: May a consumer seek monetary penalties against a company for including a contractual provision made illegal under section 1670.8 as part of the terms and conditions on its website, even if the company never threatened to enforce that provision or take any action against the consumer? We hold section 1670.8 outlaws non-disparagement clauses in consumer contracts, but it unambiguously allows a consumer to bring a suit for monetary penalties only when a seller attempts to enforce such a provision or otherwise seeks to penalize a consumer.”
The question arose after Crystal Arterberry and three others filed a putative class action complaint against Peet’s Coffee on Dec. 20, 2023, asserting a causes of action under §1670.8. In the operative pleading, they alleged that they made online purchases from the defendant and that governing terms of use prohibited them from posting on the company’s website “in any manner…that would disparage Peet[‘s] products or brands.”
Demurrer Filed
Peet’s demurred, arguing that the plaintiffs had failed to state a claim because the terms did not violate §1670.8 and, even if they did, the failure to allege that the defendant threatened to enforce the challenged provision was fatal to their causes of action. Los Angeles Superior Court Judge Carolyn B. Kuhl sustained the demurrer in December 2024, ruling that a company’s attempt to impose a condition that violates the section is insufficient grounds to sue.
She denied leave to amend, citing the fact that the plaintiffs did not claim that they could allege facts supporting a claim that Peet’s sought or threatened enforcement against them, and judgment was entered against them in January 2025.
Commenting that “we assume without deciding” that the challenged terms and conditions “violate section 1670.8,” Weingart wrote:
“The plaintiffs argue that a defendant may ‘violate[] this section’…, and thus trigger a consumer’s right to bring a cause of action, not only by threatening or seeking to enforce a non-disparagement agreement or penalize a consumer for speaking…, but also simply by attempting to create a consumer agreement prohibited by subdivision (a)(1). The trial court explained why this interpretation is inconsistent with the text of the statute….”
Nothing in Section
The jurist opined:
“[N]othing in section 1670.8, subdivision (a)(1) makes the act of inserting illegal language, or proposing or attempting to enter into an illegal contract, unlawful. Any such verbs are missing from this portion of the statute. This is not an academic point; without language defining what constitutes a violation, it is impossible to say how or how often a business that includes a potentially illicit clause in the terms of use of its website would violate the statute.”
He added:
“The Legislature knows how to penalize specific conduct, as it did in section 1670.8, subdivision (a)(2), where it included the relevant verbs: ‘It shall be unlawful to threaten or to seek to enforce a provision made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section.’ (…italics added).”
Rejecting the view that a violation of subdivision (a)(1) alone is sufficient, he wrote:
“Under this statutory schema, merely creating or attempting to enter into an illegal contract, whether that type of contract is described as ‘void’ or ‘unlawful,’ does not create an independent cause of action unless the Legislature provides one explicitly….[T]he Legislature did not do so for creating a contract made invalid by section 1670.8.”
Legislative History
Weingart reasoned that the legislative history supported the court’s interpretation, saying:
“Section 1670.8 applies to everyone, be it a Fortune 500 company or a small family business. If, as the plaintiffs allege, the use of a non-disparagement clause created a cause of action with respect to each California resident who visited a website, with a civil penalty of up to $2,500 for each such resident, then a relatively small business with 10,000 online California customers would face up to $25,000,000 in penalties for using insufficiently precise content moderation and trademark enforcement language in the terms and conditions of its website.”
The justice continued:
“The same business would face no more than $5,000 in penalties for actually threatening or seeking to penalize a consumer for posting a negative review. In the more than 400 pages of legislative history that the plaintiffs submitted for our review, we see nothing to suggest the Legislature intended the statute to work this way.”
The case is Arterberry v. Peet’s Coffee Inc., 2026 S.O.S. 2235.
Benjamin I. Siminou, Jonna D. Lothyan, Christopher R. Rodriguez and Andrew D. Bluth of Singleton Schreiber LLP acted for the plaintiffs. Michael D. Meuti of Benesch, Friedlander, Coplan & Aronoff represented the defendant.
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